Optimum Coal potential buyer wants to ‘buy out’ other creditors

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The Optimum Coal Mine. Photo: Bloomberg
The Optimum Coal Mine. Photo: Bloomberg


Daniel McGowan, the man who was on the cusp of buying the Gupta-owned Optimum Coal Mine, has offered to buy other creditors out pending the mine’s legal battle with the National Prosecuting Authority (NPA).

In a PR statement, McGowan said he was open to making offers directly to the creditors of Optimum Coal.

“Liberty Coal, via its parent company, Liberty Energy, has today announced an open offer to all creditors of Optimum Coal to purchase creditors’ claims against [the mine].”

“Liberty Energy is offering to purchase from each creditor of Optimum Coal (excluding related party creditors and those creditors whose claims are contingent or disputed) its total monetary claims against Optimum Coal as at September 28 2020,” the statement reads.

It said all creditors of Optimum Coal had the option of an outright purchase equal to 20% of the total amount of their claims, which will be payable in cash within 10 business days.

“In the alternative, a creditor who was eligible to elect, and did elect, to exchange its claims for shares in terms of the plan adopted on September 28 2020, may choose to cede (sell) its claims against Optimum Coal incrementally for a purchase price equal to the compromised value of its total claim, whereby the purchase price will be payable in cash in consecutive monthly instalments over a five-year period.”

READ:  Following court victory, NPA aims to move fast to seize Gupta-owned Optimum mine

One of Optimum Coal’s largest creditors is Eskom, which in September 2020 voted in favour of a business rescue plan that envisaged Liberty Coal acquiring Optimum Coal business and assets.

Eskom accepted a settlement of R0.20 on the rand, payable over five years, with payments due to commence one year from implementation of the business rescue plan.

“The open offer by Liberty Energy is intended to put creditors in a position whereby they have a mechanism to realise money now, while there are delays with the implementation of the business rescue plan due to ongoing litigation – to the advantage of the creditors.”

“The main advantage to all creditors is that we will commence payments immediately, on a monthly basis, over a fixed period of time, or alternatively make payment in full for R0.20 on the rand, whereas in terms of the business rescue plan, all creditors would receive an annual amount towards the value of their compromised claim, subject to Liberty having made sufficient profit to pay such amounts.”

“The main advantage to Eskom is that the compromised value of its creditor claim of [about] R255 million, which was due to be paid over five years, will be payable now in full,” McGowan was quoted as having said in the statement.

He said:

Simply put, Eskom will be paid the amount to which it agreed, but with payment made in full as the obvious cash flow advantage.

“We have therefore been understandably disappointed that, notwithstanding Eskom’s formal support for Liberty’s proposed business rescue of Optimum Coal, [the power utility] has now seemingly changed its stance and unofficially chosen to support the NPA application for a preservation order of Optimum Coal’s business and to rather potentially seek its forfeiture to the state.”

“This application has been firmly opposed by most other parties affected, such as the National Union of Mineworkers and an additional 134 individual creditors of Optimum Coal.”

McGowan said the almost unanimous support recognised that any delays in the implementation of the business rescue plan served only to defer employment opportunities and deprive the local mining communities of much-needed sustenance.

“The open offer will put money into the pockets of the previous employees and creditors who have had nothing for over four years in circumstances where Liberty Coal is taking on the additional commercial and legal risks of further challenges from the NPA.”

In March, the NPA pulled the plug on the sale of Optimum Coal to Liberty Coal because the authority saw McGowan’s purchase of the mine as the Gupta family’s attempt to get their mine back in the mining business through the back door.

But the Dubai-based businessman said that without the offer made by Liberty, all other creditors, including Eskom, would suffer potential delays to payment of the amounts due to them in terms of the business rescue plan, with the risk of potentially never receiving their due claim amounts.

Eskom’s recognised creditor claims stem from contractual penalties which were initially disputed by Optimum Coal, but eventually settled via arbitration that resulted in a settlement agreement.

“We remain committed to a successful rescue of Optimum Coal, whether in terms of the adopted business rescue plan or any new business rescue plan that may be proposed and is acceptable to creditors in future.”

“However, we are acutely aware of the ongoing hardship and distress caused to many of Optimum Coal’s creditors, local businesses and community stakeholders as a result of this latest derailment of the business rescue process,” McGowan concluded.

In January, creditors of export facility Optimum Coal Terminal voted in support of adopting a business rescue plan which proposed that Optimum’s valuable export allocation be transferred to Liberty Energy.

The Guptas’ acquisition of Optimum Coal Mine was mired by allegations of political interference, with former mining minister Mosebenzi Zwane allegedly having travelled to Switzerland to meet with the bosses of Glencore to lobby for the sale of the mine to an entity owned by the politically connected business family.

Eskom made a R1.68 billion coal prepurchase payment to Tegeta Exploration and Resources, a Gupta-owned entity that was used to buy the mine.

Who is Daniel McGowan?

McGowan is an international businessperson whose holding company is registered in Bermuda, in the North Atlantic Ocean, and who, along with the Guptas, has been trying since 2013 to get his hands on mines that sell coal to Eskom.

McGowan responds as follows, “I’ve only ever been involved in the coal export market, I have never tried to get my hands on mines that sell coal to Eskom, nor have I been involved in any business that sells coal to Eskom. I have certainly never tried to get my hands on mines that sell coal to Eskom along with the Gupta’s as alleged. When the OCM business rescue plan was published OCM had no contract with Eskom and a new contract with Eskom was not included as a condition within the plan.”

Two of the Gupta brothers, Tony and Ajay, were both directly involved in this. Their son-in-law, Aakash Jahajgarhia, the groom at the infamous Sun City wedding, was effectively McGowan’s partner in Centaur Mining, which “allegedly helped mobilise cash for the Gupta family’s purchase of Optimum and, on its own version, provided a loan to [the Trillian group], cash that was ultimately used for [Gupta associate] Salim Essa’s bid to buy the auditing firm Nkonki after South African banks terminated a horde of Gupta bank accounts”.

Liquidators Cloete Murray, Sivalutchmee Moodliar and Ndumiso Sibiya have publicly accused McGowen of being a Gupta associate, an allegation which the businessman denies.

Centaur is one of the biggest creditors of Optimum Coal, a claim which the company wants to turn into shares in the ailing mine.

Court papers allege that Centaur Ventures held about R1.2 billion in a Bermuda bank account, which was used to provide guarantees for loans in South Africa in a series of financial transactions that ultimately helped fund the purchase of Optimum Coal Mine and the Optimum Coal Terminal.

McGowen’s business shared a building with the Gupta family in Dubai before the parties allegedly had disagreements over petty issues such as phone bills and water accounts. City Press understands that he is suing the Gupta family for money which he alleges he is owed by the brothers.

Those close to him say he has cut ties with the Guptas, who allegedly swindled him out of large sums of money.

     READ: Former Gupta associate may take over Optimum, court hear


Abram Mashego 


+27 11 713 9001
69 Kingsway Rd, Auckland Park

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